Bad Faith Denials: Was Your Disability Insurance Claim Denied in Bad Faith?
In British Columbia, insurance companies are obligated to act in good faith when reviewing a long-term disability (LTD) claim. Unfortunately, disability insurance companies don’t always follow this rule. If you suspect your disability claim could have been denied in bad faith, we’re here to help.
This article will provide general information on bad faith LTD denials, signs of companies acting in bad faith, and what you can do to seek justice.
This article contains general information and is not legal advice. For qualified legal advice, please call 604-876-7000 to get in touch with a BC Disability Insurance Lawyer near you.
*Please note that if you are a union employee and are subject to a collective agreement that references a disability insurance plan, you should immediately discuss your claim with your union representative. Our firm may not be able to assist in these situations. Limitation periods can be very short—sometimes weeks—when a union grievance process is available.
What Is a Bad Faith Denial in Disability Insurance Cases?
A bad faith denial happens when an insurance company unreasonably refuses to pay out a legitimate disability claim or fails to handle it fairly and honestly. Insurance companies have a legal duty to act in good faith, meaning they must treat policyholders fairly, investigate claims properly, and honor valid coverage.
Denying, delaying, or underpaying legitimate claims without justification can all demonstrate bad faith.
Long-term Disability (LTD) Claims That Are Commonly Denied by Insurance
For the most part, disability insurance providers deny most of the LTD claims they receive. There are some types of claims that are more commonly denied than others, including:
- Claims revolving around a mental health condition (depression, severe anxiety, bipolar disorder, PTSD.etc)
- Mental health conditions have varying severities. Insurance providers know that many Canadians live with a mental health condition and continue to work, making them very reluctant to pay out mental health-related claims. However, one’s mental health condition can be severe enough to affect their ability to work, and these cases deserve adequate coverage.
- Claims that involve a physical “invisible disability” (a disability which is not immediately apparent), such as chronic pain.
When one has what is known as an “invisible disability”, the limit of what they can do is largely subjective, especially with conditions that cannot be represented in an X-ray or MRI scan. Insurance companies use these subjectivity to their advantage, and often cite a lack of objective evidence when denying claims. Mental health conditions are also considered an invisible disability.
Common Examples of Bad Faith by Disability Insurance Companies
Insurance companies may act in bad faith in several ways, including:
- Denying a claim without proper investigation
- Ignoring or minimizing strong medical evidence
- Misrepresenting policy terms
- Delaying payments or communication unnecessarily
- Pressuring you to accept a low settlement
- Failing to explain the reason for denial clearly
These actions can cause serious emotional, financial, and mental distress for the claimant. It leaves them without income protection when they need it most, affecting their ability to afford necessary living expenses, as well as medical expenses for their condition. Bad faith actions from the company can justify further legal action from the claimant.
Why Disability Insurance Companies Act in Bad Faith
Disability insurance companies are a for-profit business — they make money through selling insurance products and collecting premiums from policyholders.
Disability insurance companies lose money whenever they have to pay out a disability claim. They depend on most policyholders not making claims in order to turn a profit. This is part of the reason why pre-existing conditions are excluded from disability insurance coverage in most cases. A pre-existing condition introduces more risk of having to pay out.
With this in mind, it is clear that these companies have a major incentive to deny and limit what claims they pay out, even if it’s in bad faith and/or isn’t reasonable.
What You Can Do If Your Long-term Disability Claim Was Denied in Bad Faith
If your disability claim has been denied, it’s important to act quickly:
- Don’t rely solely on an internal appeal. These appeals are reviewed by the same insurer that denied your claim. This can waste valuable time you could use to escalate your case and get coverage more quickly.
- Contact a BC disability insurance lawyer at Dyson Law Firm. Our lawyers can review your policy, gather medical evidence, and identify signs of bad faith.
- File a lawsuit with your lawyer if needed. If the court determines your claim was wrongly denied, the insurer can be ordered to pay the benefits owed. In some cases, you could be entitled to back pay and additional damages for acting in bad faith.
Get Justice for a Bad Faith Insurance Claim Denial in British Columbia
Dealing with bad faith denials is not easy when you’re actively struggling with a disability that affects your ability to work. Being unfairly denied leaves you with no income protection, contributing to your emotional stress and giving you little room to heal and recover.
Don’t let a denial stop you from getting the support you deserve. Our experienced disability lawyers are here to validate you and help you get justice. We put empathy at the forefront of everything we do.
By calling or booking a no-obligation consultation with our British Columbia disability lawyers, you’re getting an impartial, expert legal opinion on your case and whether it’s worth going to court. We’ll handle all the required paperwork to file on your behalf, giving you time to focus on your health.
We regularly utilize mediation and negotiation to resolve your disputes in a cost effective and less stressful manner. However, we won’t hesitate to go to court or arbitration if necessary.